Budget - focus on the numbers, not the spin

I'm afraid to disappoint regular readers this week, but I really don't have much to write about.

The big story is going to be the budget, to be released on Tuesday evening. We're in store for a terrible time. Not only has the economy turned sour on us, but St Kevin de la Grande Tantie has already spent most of the surplus on handouts, not least the increase to the abomination that is the First Home Buyers' Grant.

Soon these handouts will have to stop. We can't just keep handing out billions willy-nilly in a doomed effort to inject buoyancy into asset prices and retail sales. Well, that's what logic would tell us.

The end of the handout culture will also coincide nicely with the other thing which has kept our economy buoyant - high prices for our commodity exports.

So we're going to lose a lot of stimulus, just at the time that we need it. And there won't be anything to replace it because St Kevin, in his wisdom, has already raided the pantry. There's not much left, and we'll have to be borrowing - temporarily, of course - for the next, oh, say, ten years or so.

RuddWatch will be looking closely at the figures for government spending. A comparison with those of the Whitlam years should be instructive. It took us twenty five years to finally overcome the Whitlam legacy. We've had around nine or ten good years - when the economy and the budget have been behaving more or less as they ought to behave. And now, thanks to 'economic conservative but non-extreme capitalism' St Kevin, we're about to go back into the dark ages.

Again, the budget outcome shows in relief the cynicism of the man we have elected to high office. Remember how he used to call himself an economic conservative? He will say anything to get himself out of a hole. Is there anyone out there who still believes anything this man says?

The evidence was on display this week, when St Kevin and heartthrob Penny announced - with serious looking masks donned for the occasion, that the government would have to delay the introduction of the promised emissions trading scheme for a year. This is the emissions trading scheme that was so urgent it couldn't be delayed later than 2010, remember?

The reason given for the delay was the economic crisis. Now the more attentive among you will remember the Treasury's analysis of the scheme, released last year, which essentially said that the scheme would have almost no economic impact. So, if the introduction of the ETS is supposed to be economically neutral, how come world economic conditions necessitate its delay? Somebody's got something wrong somewhere.

Your intuition is correct, dear reader. The ETS will have a substantial effect on the economy. A substantial negative effect. The Treasury analysis was just window dressing to reassure the public - a bit like the ACCC's 'analysis' of the Perth fuelwatch scheme. When Henry Ergas sought background information on Treasury's modelling, it was denied him. Hardly a vote of confidence in the government's assertions.

One thing that really struck me about the changes is that, after all the assertions that a trading scheme would be superior to a carbon tax, St Kevin has changed the rules so that, for the first year of operation, the scheme will actually be a carbon tax - a fixed price with unlimited quantity!

The whole thing suggests that St Kevin and his team really aren't thinking things through very well before opening their mouths.

It's not all bad. I'm hoping that they make it an annual event - complete with this year's 'Greek Tragedy' masks.

Anyway - may you enjoy budget night. In the meantime, I recommend that you read Terry McCrann's columns in the Herald Sun and the Australian. McCrann, for my money, has St Kevin nailed, and is tirelessly ringing the bell on his serial frauds.